Monday, February 04, 2013

Dear Jim

Finance Minister Jim Flaherty urged the federal broadcast regulator to grant a radio licence to a company in his Ontario riding even though government rules on cabinet responsibility forbid ministers from influencing the decisions of administrative tribunals.

In his letter to the Canadian Radio-Television and Telecommunications Commission, Flaherty praised Durham Radio Inc.'s bid to obtain a licence to operate a new FM station for the Toronto area.

There is so far no suggestion that the Minister stood to benefit personally from the application. Despite Flaherty's intervention Durham Radio did not actually get a license to operate a new FM station. So far as we know this is not quite like the Grand-Mère Golf Course, a scandal from which Jean Chretien did not so much walk as tap dance away from. Yet there is a faint smell in the background. The stuffy odour of a government too long in power and faced with a relatively weak opposition.

This story contains not one but three inter-related scandals. There is the scandal of the Minister of Finance possibly violating federal rules about non-intervention with quasi-judicial bodies like the CRTC. Whether Minister Flaherty violated federal law is another matter. Then there is the larger scandal of having a government so big that, no matter how hard you might try, it becomes impossible for a politician not to break this rule or that. Finally there is the scandal of why in the 21st century we still have the CRTC.

For a moment put yourself in Jim Flaherty's pricey loafers. Aside from being the Minister of Finance, arguably the second most powerful man in Canada, you are also a Member of Parliament. While some of your constituents will keep voting for you just because you sit in cabinet, and are therefore gosh darn important, most will expect that in addition to building up the national debt you help out the local community. This could be routine stuff like helping a constituent navigate the maze of modern government, or pork barrel stuff like building a community centre.

It seems that in writing to the CRTC the Minister was doing pretty much what any MP would have done and what, in point of fact, two other Toronto area MPs did as well: Lobby for a local business to help obtain required approvals to start-up a new enterprise. Local MPs get flooded with such requests. That's part of what they're paid to do. When government was small and mostly local this sort of behaviour was kept to a rough minimum. Even when MPs were expected to bend to the rent seeking instincts of some voters, it was done through the time honoured tradition of patronage. Someone's got to deliver the mail. Why not a loyal Tory or Grit?

For those folks who weren't looking for a government job, the local MPs wasn't all that important in their day to day lives. You could make a living without having to deal with government at almost any level, excepting some simple paperwork registering your property and paying taxes. In modern Canada the state has grown to a size and scope so that thousands of small businesses find themselves entangled in federal red tape.

A private citizen without the slightest intention of rent seeking still finds themselves at the local constituency office asking for help. What is an MP to do? This is the way the system works. A bureaucrat is more likely to take a citizen's request or application seriously if a politician's name gets dropped in the process. Even the most honest of citizens and respectable of politicians winds up getting sucked into this game of wire pulling and influence peddling.

The great scandal here is not Jim Flaherty writing a letter, or a local business asking him to write a letter, it is that the local business in question had to deal with the CRTC. For decades the radio spectrum has been considered government property in Canada. A private radio station does not own their small slice of the electro-magnetic spectrum, the government does. In their wise benevolence the state, through the agency known as the CRTC, allows private businesses permission to operate at a certain frequency. That permission is conditional on the operator adhering to the will and even the whim of the CRTC.

This is the reason that Canadian broadcasting has historically been so tame in their opinions compared to the newspapers. A newspaper publisher owns the means of distribution and does with it as he pleases. A radio or television broadcaster is at the arbitrary mercy of the CRTC. Millions of dollars in invested capital and hundreds of jobs can be destroyed overnight simply because some government bureaucrat doesn't like you. Recall the case of Quebec radio station CHOI-FM whose license was not renewed because of the rudeness of some of its talk show hosts.

In so arbitrary and subjective a climate business people have to seek the protection of politicians. Confronted with an out of control bureaucracy politicians have a duty to intervene, both to protect their own constituents and the rest of Canadian society. If a media business can be silenced for failing to observe certain niceties, then freedom of speech is directly threatened. A principled politician might very well find themselves lobbying the CRTC for just such a reason.

What is needed is not more guidelines or offices of parliamentary oversight. You do not solve the problems of a bloated bureaucracy by bloating it further. We need to return to freedom. In the case of telecommunications it means stripping the CRTC of its regulatory powers. Broadcast frequencies need to be made private property, much in the same way that Mrs Thatcher privatized the government housing stock in Britain in the 1980s: Sell it at a nominal price to its current occupants.

The same principle of private property and freedom of trade needs to be re-established in every sector of the Canadian economy. The greatest check on government corruption is having a small and highly limited government. The greatest bulwark in defence of freedom of speech and accountable government is a privately owned and privately financed media. Thanks to the CRTC we don't really have either in modern Canada.

“The greatest check on government corruption is having a small and highly limited government.”

Additionally, as much as possible, government needs to be kept tightly local. We need government close, where we can keep an eye on it. There is a local immunity to corruption but that immunity breaks down with distance; corruption can flourish at a distance....e.g., equalization payments.